The purchasing power parity (PPP) hypothesis is often used in assessing a particular level of exchange rate or the adequacy of an exchange rate policy. However, in countries where the real exchange rate is likely to be affected by real factors, PPP becomes a less useful tool, whereas obtaining an estimate of the equilibrium real exchange rate could be beneficial. This paper conducts an empirical examination of Angola's parallel market real exchange rate during the 1992-98 period. We test the PPP hypothesis and then assess the influence of two key variables on the parallel market real exchange rate: the price of oil and the world interest rate
Bibliography
Includes bibliographical references (pages 13-14)
Notes
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